Augusta Tech drops student loan program

Augusta Technical College will no longer offer the federal direct loan program after more than 200 students received loans, dropped out of school and took the money with them – leaving the college to deal with the debt.

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As students ditched school with cash in their pockets, the college was responsible for repaying $733,000 to the federal government and the state, which had to come out of 2013 profits, according to President Terry Elam.

“We had to discontinue the program because of what it’s doing to our bottom line,” Elam said.

While students who receive direct loans are required to pay back the government, Elam said the school as the middleman is responsible for the debt if the student withdraws before the 60 percent point in a term. Many of the students also collect on Pell Grants and HOPE Scholarships that cover tuition and do not have to be paid back, leaving them with cash from the loan that should go toward living expenses, books or other costs.

However, the issue at Augusta Tech is not a local problem.

According to the U.S. Department of Education, $829 million in Pell Grants were awarded to students who did not intend to use the money for school, and the federal financial aid Title IV department accumulated more than $1.1 billion in defaulted student loans since 2011.

In March, Kathleen Tighe, the inspector general of the Department, testified before the Committee on Oversight and Government Reform about fraud rings identified in the education system that enroll in schools just long enough to receive financial aid and then drop out to transfer to another institution.

“They call them Pell Runners,” said Terry Hartle, the senior vice president for the American Council on Education. “They enroll in higher education to get access to financial aid not because they necessarily want to get an education. As soon as they can get away with the money, they do it.”

Elam acknowledged not all the students that contributed to the $733,000 in debt were Pell runners. However, they all shared the common denominator of dropping out for whatever reason and leaving debt behind.

In order for students to have access to direct loans, their college or university has to participate in the program. Normally the government writes a check to the institution in the student’s name and the money is credited to the student, Hartle said.

Depending on the type of loan, which can get up to $5,500 the first year, the student is responsible for repaying the debt either while in school or after graduation.

“At the conclusion of an education, the student repays the federal government,” Hartle said. “If not, the government follows them to the end of the Earth to get the money back.”

As in Augusta Tech’s case, the school becomes responsible when the student withdraws before the 60 percent mark in the semester and the loan becomes a receivable to the school.

Elam said he realizes some students who used the loans responsibly will suffer without access to the program. However, students are being advised on private loans, scholarships and other financial aid they are eligible to receive.

Freshman Mike Jacovino said the federal direct loan has been a key resource for him to afford college. He receives the Pell Grant and Hope Scholarship, but applied for the loan to get help with living expenses and books while attending school.

With children to care for and a degree he wants to complete, Jacovino, 33, said this change is enough to make him consider transferring to the University of South Carolina, the closest school that offers both his cardiovascular technology degree program and direct loans.

“This is my only shot,” he said. “If they can’t do the loan here at Tech, I can’t go out of pocket. It would really mean me changing schools.”

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These individuals may have escaped for now but there are many stop gaps in life where they will have to own having these loans. Having worked in higher Ed, I do know that there are many reasons that individuals drop out of school. Trust, few if any go to the trouble to enroll just to take off with loans. Does that negate the individuals' responsibility? No, but again, too many on this page are too quick to draw a line between every aberrant behavior to welfare.

I suggest you find the clip of Congresswoman Tammy Duckworth in a hearing when she dresses down a government contractor who is getting VA benefits for a prep school injury. For some reason people do not care as much about "white collar/corporate" welfare but keeping looking around the corner for that "Welfare Queen." I wonder why!

The first semester is on you. If you pass, then the school is paid for your next semester and so on.

Can't come up with the money for the first semester? Then a grant, loan, or whatever can be paid directly to the school, not to the student. In cases where the student qualifies for extra support, they are paid through the school, contingent upon successful coursework.

And our dumb federal government can't figure out a solution to this dispite having the students SOCIAL and all of their personal info. And we are suppose to let these idiots provide health care for us as well.

Then there are people like me- I cried when I found out I was getting a Pell grant, I was so grateful that I got it, I wasn't about to waste it.

We were so poor, and things were so bleak. To think that this is a wasteful program is wrong. It changed my life, and I am thankful every day that I was able to complete college because of it. And my earning power went up by so much, I have paid back the grant many times over.

Just because there are some thieves out there doesn't make it a bad program, there are just bad people.